A car burns as workers block the main gate of the Ford plant in Genk, Belgium. Ford plans to close the factory. / Geert Vanden Wijngaert/Associated Press

By Mathieu Rosemain

Bloomberg News

Wim Dries was at the public swimming pool with his kids last month when a loudspeaker announcement asked him to take an urgent call. On the line was the head of Ford's factory in Genk, Belgium, who said he was being held by workers opposed to a plan to close the plant.

"He was surrounded by a group of strikers and the tension was high," said Dries, the city's 40-year-old mayor. After Dries offered to send police to the factory, "things cooled down," and the workers let the manager go, he said.

The labor trouble at Ford, which aims to shut two other European factories, shows the resistance automakers face in efforts to rein in losses in the region, which Fiat CEO Sergio Marchionne estimates totaled 5 billion euros ($6.5 billion) last year.

Auto executives, who are gathered today for the Geneva, Switzerland, auto show, are struggling to push through five plant closings and 30,000 job cuts announced since last July aimed at restoring the profitability in the region.

PSA Peugeot CitroŽn is in a court fight with a union over plans to close a factory and cut 11,200 jobs. General Motors faces union opposition at a Bochum, Germany, plant slated to be shut in 2016. Daimler last month saw a worker revolt over cost cuts at Mercedes-Benz, which led to a shorter contract extension for the CEO.

Mounting losses

Without reining in spending, losses will probably mount as the region's auto market heads for a sixth-straight annual drop. Capacity utilization in Europe will fall this year to 63% from 66% in 2012, consultancy LMC Automotive predicts, which would lead to greater losses because of the fixed costs of maintaining factories.

The proposed plant closings have prompted political uproar in the countries where shutdowns are planned, highlighting the gap between Europe, with its tradition of job guarantees, and the U.S., which swiftly restructured its auto industry at the depths of the Great Recession.

"These are very sensitive political subjects, and it's the sector where the unions are the best organized," said Juergen Pieper, a Bankhaus Metzler analyst in Frankfurt, Germany.

GM lost $1.8 billion in Europe last year, bringing its cumulative losses there to $18 billion since 1999. Ford expects a deficit of $2 billion in the region in 2013, up from $1.75 billion last year. Peugeot, which in 2012 posted its first operating loss in three years, and Renault are trying to eliminate almost 20% of their French jobs.

Labor clash

Peugeot is clashing with workers over plans to close its Aulnay plant in a Paris suburb. The CGT union has blocked the proposal in court. Workers in France must be consulted and informed before jobs are cut and plants shuttered.

The Aulnay factory, which makes the CitroŽn C3 city car, has been idle since Jan. 16, when the CGT occupied part of the facility, demanding that the company increase severance pay to at least 130,000 euros ($170,000) per worker. Peugeot is offering some 60,000 euros to those with 20 years of service.

"There are about 300 strikers linked to the CGT," said factory manager Laurent Vergely. "Out of these 300, there's a group of about 50 troublemakers who don't hesitate to cross the line."

The strikers have thrown firecrackers, eggs and bolts and spit at nonstrikers and managers. Five employees are in the process of being fired as a result of such actions, Vergely said. The CGT denies any wrongdoing and is fighting to get the workers back on the payroll.

"It's taking more time than expected" to reach agreement on Aulnay, Peugeot CEO Philippe Varin said Tuesday in Geneva, adding that he sees European car sales falling about 5% this year from last year's depressed level.

"It's the managers who have 'declared the war,' " welder Yousfi Ahmed said, surrounded by 50 strikers camped out on the blocked assembly line inside the factory. "They're the ones who decided to destroy the industrial base."

Even if automakers succeed with the five shutdowns they've announced, their efforts may fall short of what's needed. The situation in the region stands in contrast to the U.S. after the Obama administration rescued GM and Chrysler in 2008 with an $80-billion bailout. Ford didn't receive any government funds.

Today, the three largest American automakers operate 28 assembly plants in the U.S., versus 36 in 2007, according to the Center for Automotive Research in Ann Arbor. Employment at all U.S. auto factories fell to 524,200 in July 2009 from a peak of 1.16 million in June 2000, according to the center. By the end of 2012, it had recovered to 662,300.

In Germany, union representatives get half the seats on companies' supervisory boards. The Opel works council last week convinced GM to back down from a threat to close its Bochum factory at the end of next year.

The new agreement would keep the plant operating until the end of 2016 and then transform part of the facility into a components and logistics center. The plan would secure 1,200 of the site's 3,000-plus jobs, GM said. Rainer Einenkel, the plant's works council chief, responded by vowing to continue fighting to keep production in the city.